5 Best Business Loans for Trucking & Transportation
Having funded over 10,000 companies, we've found the following five financing options to work best for transportation business owners. Whichever option you choose, our advisors will walk you through the pros and cons of each to identify the best fit for your unique capital needs.
1. Equipment Financing for Trucking Companies
An equipment loan is a great fit for transportation business owners seeking to buy or replace trucks and trailers. You can finance up to 100% of the cost of buying or leasing a new rig. With competitive rates and minimal paperwork needed, you can secure funding quickly. There are no prepayment penalties or collateral requirements apart from the vehicle itself. Structure of the financing is similar to consumer car loans.
Equipment financing at a glance:
- Both good and bad credit can get approved
- Vehicle being purchased serves as collateral (no other collateral needed)
- Low interest rates starting at 7%
- Low documentation
2. Short Term Loan for Trucking Companies
When you think of a small business loan in the traditional sense, you are thinking of a term loan. You borrow a fixed amount of money at a specific interest rate that you pay back based over a loan term length. You don't need any collateral or personal guarantee to get approved for a short-term loan. It's the most popular borrowing option for transport businesses.
Term loans at a glance:
- Instant approval and funding
- Closing within 24-48 hours
- No collateral required
- Bad credit is okay (we still recommend at least 550+)
3. Business Line of Credit for Trucking Companies
A business line of credit is a flexible funding option to have working capital always available when needed. Lines of credit have competitive interest rates and are structured similarly to a business card. You have a maximum limit you can withdraw funds from and only pay interest on the amount of money you use.
Business line of credit at a glance:
- Flexible, on-demand capital
- Interest only charged on amounts withdrawn
- No prepayment penalty
- Helps improve your personal credit score
4. B2B Invoice Financing for Trucking Companies
If you run a B2B commercial trucking business, you likely have outstanding invoices that are yet to be paid. Invoice financing, also called invoice factoring, allows you to get up to 100% of the invoice value from a lender as a lump sum payment. But what if your business is not B2B? In that case, we recommend equipment financing, term loans, or a business line of credit.
Invoice financing at a glance:
- Quick access to working capital within 24 hours
- No need to wait for invoices to be paid by customers
- Your credit score is not a factor -- lenders look at the credit rating of the business whose invoice you have outstanding.
5. SBA Loans for Trucking Companies
The Small Business Administration provides financing backed in part by the agency (up to 80%). The two most popular SBA loan options are the 7(a) and Microloan programs. Among all loans available for transportation companies, SBA loans have the longest time to approval. This is due to the high paperwork and credit score requirements by the SBA and it's approved lenders. If you need qualifications for an SBA loan, Clarify's advisors help you streamline the application process.
Invoice financing at a glance:
- Guaranteed up to 80% by the federal government agency
- Low APRs
- Recommended if your needs for capital are farther out into the future
